2.n the textbook, Chapter 19, the author talks about a scenario where a Principal has different options of setting wages and the Agent has different levels of work.Consider this model with the following special values:

u(2w); dH=15, dL=0, g=300, m=200, b=100, wb=wage base=0

eHresults in a probability of profit levels g, m, b as 0.5, 0.3, 0.2

eLresults in a probability of profit levels g, m, b as 0.2, 0.3, 0.5

Assuming the Principal chooses a pure wage scheme, what would be the expected payoffs for the Principal and the Agent?

Assuming the Principal chooses a pure franchise scheme, what would be the maximum franchise fee?What would be the expected payoffs for the Principal and the Agent?

Assuming the Principal chose a wage plus bonus scheme, what is the minimum bonus to induce eH?What would be the expected payoffs for the Principal and the Agent?Assume the bonus is awarded only for good, not for medium.

In this scenario, what should the Principal choose to do?

text book name: strategies and game theories; prajit k dutta

PS: i feel there is typo in question as in case of pure franchise it turn out to be insolvable